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GAZETTE SUPPLEMENT
APRIL. 1984
negotiated a separate contract with Cork County
Council. The business of the company in receivership did
not exist in relation to the contract work at Bantry when
the respondent contracted to complete the outstanding
work and there could not, therefore, be a transfer or
change of ownership of a business or part of a business.
The Tribunal held that the service of each of the
claimants with the company in receivership could not be
added to their service with the respondents and, as they
did not, therefore, have the minimum service with the
respondents necessary to qualify for a redundancy
payment their claims were dismissed. Cases of this sort
should be of help in interpreting the scope and applica-
bility of the Acquired Rights Regulations, keeping in
mind the added proviso that, under the Regulations, there
must be a change in employer.
Coughlan v. Keane
It is believed the Regulations have only been raised
once with the Employment Appeals Tribunal in this
country, in the case of
Coughlan-v- Keane, T/A Keaneland
Hotel,
Case no. M373 UD256/1982. The claimant was
employed as a receptionist at the respondent's hotel from
25th July, 1980, to 16th October, 1981. The hotel closed
on 7th October, 1981, and the staff were paid up to 9th
October, 1981. The claimant maintained that she was
informed on 7th October that the hotel was being sold. On
16th October she was sent home and, when she returned
on 27th October, was informed by the hotel proprietor
that the new owner would speak to her later about her job.
On 3rd November, 1981, the hotel re-opened. The new
owner offered the claimant a job on 6th November, 1981,
but she refused the offer because the conditions of
employment were radically different from what she had
done previously. The claimant relied on the 1980
Regulations and maintained that she was unfairly
dismissed. After considering the evidence, the Tribunal
found that the Regulations did not apply in the case, as
there was a break in service, the contract of employment
ending when the hotel closed. The Tribunal held that
there was a redundancy situation and, under the
provisions of Section 6(4)(c) of the Unfair Dismissals Act,
1977, dismissal due to redundancy was deemed not to be
unfair and the claimant's claim was dismissed. It should
be noted that the claimant was not legally represented and
it would appear that the Regulations were not opened to
the Tribunal in full. The Tribunal appears to have
accepted that the transferor of the hotel terminated the
claimant's employment. It would appear in that event
that the transferor must justify such termination on the
grounds of economic, technical or organisational reasons
entailing changes in the work force, as required by
regulation 5 of the Regulations. This does not appear to
have been done in this case.
UK
Industrial Tribunal Cases
A number of decisions have been given by Industrial
Tribunals in the U.K. touching on the regulations. In
Bachelor -v- Premier Motors (Romford) Ltd. and Petropolis
Limited,
COIT 13 59/181, the claimant was the manager
of a petrol station. On 5th April, 1982, his employers, the
first named respondents, entered into an agreement for
the sale of the petrol station to the second named
respondents. Completion of the sale took place on 1st
June, 1982, and this included the sale of the premises,
fixtures and fittings and other minor pieces of equipment
and stock.
It was expected that customers would continue to use
the petrol station after the sale. Premier Motors were
prohibited from meeting with Petropolis Limited after the
sale. Mr. Bachelor was not taken on by the new owners
and claimed unfair dismissal and redundancy payment.
The Tribunal held that the regulations were applicable as
the sale was the transfer of a business involving a change
in employer. The relevant factors in their mind being: (a)
although the sale agreement referred only to the sale of
the lands and buildings there was an effective transfer of
the business; (b) although there was no express
assignment of goodwill, goodwill was effectively
transferred because Premier had agreed not to sell petrol
on adjoining lands so depriving themselves of the power
to compete; (c) it was likely that Petropolis Limited would
continue to trade with the same customers as Premier and
(d) Petropolis Limited intended to carry on exactly the
same business as Premier had carried on. Mr. Bachelor
was, therefore, able to sustain a claim of unfair dismissal
against Petropolis Limited.
A somewhat similar case was that of
Walker and Others
-v-
Masters and Milburn and Smiths Prompt Service Depot
COIT 13 66/98. Smiths ran a car sale and repair business,
selling both new and old cars with the franchise from B.L.
The business was owned by Mr. Smith, but he had little to
do with the actual running of it as he was in full-time
employment elsewhere. Trade was poor and Mr. Smith
decided to sell the business. M. & M. were interested and
discussions about the proposed sale began. M. & M. were
not interested in selling the used cars but otherwise wished
to carry on the same sort of business as Smith had done.
Agreement was reached that M. & M. should purchase the
premises and all the equipment, furniture, fixtures and
fittings. Mr. Smith disposed of a number of used cars.
There were also new cars but these were held under the
B.L. franchise. It was accepted that there would be no
difficulty in M. & M. obtaining the franchise. Other stock
was also transferred. Mr. Smith did not intend to carry on
a similar business elsewhere after the transfer but there
was no clause in the agreement prohibiting him from
competing. M. & M. went into occupation of the premises
on 1st June, 1982 and a formal sale agreement was
completed about a month later at which time M. & M.
also obtained the B.L. franchise.
During the first month of occupation there was some
disruption while M. & M. carried out various building
operations and waited for the transfer of a British
Leyland franchise. The Tribunal considered the following
facts as relevant:
(a) after the sale Mr. Smith did not intend to set up a
business elsewhere and it was unlikely that Mr.
Smith would ever compete with M. & M.,
particularly as he had given up the B.L. franchise;
(b) apart from used cars, all assets were transferred;
(c) some of the employees were kept on after the
transfer by M. & M.;
(d) although no goodwill had been transferred, this was
because it had no monetary value and so was not
included in the agreement.
M. & M. argued that the business was in such poor
financial state when they took over that there was
effectively no business to transfer and that they had
simply acquired the premises with a view to starting
afresh. The Tribunal, however, held that the state of the
business was not relevant and that there was a transfer of
a business. The Tribunal concluded that the transfer was a
transfer as envisaged by the Acquired Rights Regulations
and continuity of employment should be preserved for the
two employees who were retained by M. & M. and that the
two employees who were not kept on could claim unfair
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